The smiling faces of Paris Hilton and Ryan Seacrest made surprise looks before the Louisiana Senate for Friday's hearing on unlawful sports betting.

No, they weren't personally in presence, but the world-famous celebs were conspicuously included in a slide discussion on social and sweepstakes gambling establishments - the questionable sites providing both totally free casino-style video games and rewarding prizes, such as cash, gift cards or cryptocurrency. In one advertisement, the fist-pumping Seacrest is seen plugging Chumba Casino, where anyone can 'play for totally free,' while a crop-topped Hilton holds a chip for sweepstakes operator, Wow Vegas, in the other.

The sites are simply two cogs in the multibillion-dollar industry that now finds itself besieged by suits. In the eyes of numerous gaming corporations, not to mention suit complainants and state regulators, sweepstakes gambling establishments serve as traditional gambling establishments, only without the oversight, customer protections and tax laws. So not just can they prevent the steep 24-percent federal sports betting levy, but sweepstakes operators aren't subject to regulatory difficulties like anti-money laundering and responsible-gaming securities.

One operator, Australia-based Virtual Gaming Worlds (VGW), reported $4 billion in income last year alone. Now the business faces allegations of unlawful gambling in a New york city suit that declares VGW uses star endorsers to 'develop a veneer of legitimacy' around its product. (See VGW's declaration below)

'I'm not exactly sure" if you do not trust us, you can rely on Paris Hilton" is a winning message for business operating multibillion-dollar unlawful operations out of places like Malta, Isle of Man, or US mail drops,' Friday's presenter, Howard Glaser of video gaming corporation Light & Wonder, told DailyMail.com.

Sweepstakes endorsers include a series of stars from gambling lovers Drake and DJ Khaled to swimmer Michael Phelps, as well as NBA stars Karl-Anthony Towns and Paul George - none of whom provide any differences in between standard gaming and sweepstakes play.

Paris Hilton is seen plugging Wow Vegas, among numerous sweepstakes gambling establishments found online

Ryan Seacrest prompts fans to dip into Chumba Casino, where numerous - but not all - video games are complimentary

Drake has an offer with social sweeps casino, Stake, that he routinely touts on social networks

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Instead, ads normally center around the social aspect of the casinos, while omitting the capacity for real gambling losses.

Others lure consumers with guarantees of prizes. One such operator, Stake, ran a social media advertisement showing off Drake's vehicles, aircrafts and estates before pivoting to video of the rapper playing online casino-style games.

'Daddy, why do we have a lot cash?' read the first caption on the screen.

Another caption discussed: 'Because I never ever offered up.'

The disparity between gambling websites and social or sweepstakes gambling establishments is a bit intricate, however operators of the latter insist they're not included with the former.

A spokesperson for a market trade group, the Social and Promotional Gaming Association (SPGA), explained its members are not in direct competition with online gambling establishments and sportsbooks. Furthermore, according to SPGA data, many of the gamers on social-sweepstakes gambling establishments are playing for complimentary.

'Most social sweeps customers never ever make a purchase,' the SPGA representative told DailyMail.com. 'The minority of consumers who make purchases do so in amounts far smaller sized than the common deposit or wager size at real-money online gambling sites.'

Social casinos offer customers a chance to play casino-style games with buddies. Players have the choice to purchase worthless currency frequently referred to as 'gold coins,' which can not be exchanged for real money, but can be utilized to unlock numerous features within the games.

But within the world of social casinos exists sweepstakes gaming, enabling clients to obtain other currency understood as 'sweeps coins' that can be exchanged for money or other prizes.

And therein lies the potential for monetary losses, like the ones declared by complainants in Florida, Georgia, New Jersey and New York City. One player told the Washington Post he lost more than $100,000 on sweepstakes gambling establishments in the past year after continuing to purchase more coins in pursuit of money and other things of value.

The Philadelphia 76ers' Paul George is seen promoting an International Poker occasion

Social sweeps gambling establishment Stake ran an advertisement showing off Drake's vehicles, planes and mansions

Karl-Anthony Towns of the New York City Knicks is another NBA star plugging VGW's Global Poker

Traditional online casinos are prohibited in all however seven states, which has actually helped to sustain the popularity of sweepstakes casinos.

Anyone over the age of 18 can access the sweepstakes websites, which do not require normally require recognition. However, sites like Chumba will ask for IDs from gamers attempting to withdraw any funds.

Many sites, like the crypto-compatible Stake, enable customers to send mail-in demands for totally free sweeps coins, offered the players follow painfully specific guidelines. What's more, players are typically rewarded with sweeps coins just for signing up, consequently offering them a reason to attempt their hands at any variety of casino games for a chance to win - or lose - genuine cash.

So why are sweepstakes websites allowed to operate in 48 states, while online gambling establishments are prohibited in all however 7?

According to the stakeholders, their product is the totally free casino-style gaming, and the real-stakes competitors is just a method of promoting their bread and butter.

'Social sweepstakes games are simply a kind of online home entertainment,' an SPGA spokesperson informed DailyMail.com by e-mail. 'No purchase is needed to dip into social gambling establishments with sweepstakes prizes. Consumers never need to pay for a chance to win prizes. That lack of a purchase requirement - or" factor to consider" - is an important difference between social sweeps and traditional online gaming sites like casinos.'

Consider the manner in which McDonald's utilizes its annual Monopoly game to promote its food: Customers aren't paying to bet, but rather they're purchasing hamburgers and french fries that offer them the possibility to win financially rewarding rewards, such as a $1 million jackpot.

And without a purchase requirement, or 'consideration', the game itself does not meet the definition of sports betting in the US.

'Sweepstakes are a long-standing method for promoting all kinds of daily services in the United States, everything from burgers to publication subscriptions to coffee and home enhancement shops,' the SPGA spokesperson informed DailyMail.com. 'Sweepstakes promos are frequently used by a who's who of family names like AT&T, Chase, Home Depot, Marriott, Starbucks, and Wal-Mart.'

But to lots of sports betting market insiders, that argument doesn't cut it.

For starters, gaming lawyer Daniel Wallach points out, McDonald's Monopoly video game doesn't run forever. Rather, it has a distinct beginning and end, thereby suggesting the sweepstakes is not the fast-food giant's primary item. Instead, the sweepstakes is being utilized to promote genuine items like french fries, shakes, and the Filet-O-Fish.

'They don't last forever and they're normally not connected to casino-style games of possibility,' Wallach told DailyMail.com. 'They're just money giveaways.

'The sweepstakes [casinos] have none of the attributes commonly connected with McDonald's-design sweepstakes promos,' Wallach continued. 'Besides running in all time, the sweepstakes casinos offer" casino-like" payouts, usually 80 percent or more of profits, whereas the common payout percentage for a momentary promotional sweepstakes is a minor share of the earnings made by the business [generally less than one percent]'

Wallach is fast to compare the online social sweeps casinos to the web coffee shops that emerged in Florida, providing consumers the opportunity to play casino-style video games for genuine rewards. Much of those brick-and-mortar establishments have given that been shuttered over claims of illegal gambling.

DJ Khaled is amongst a number of celebrity spokespeople for VGW's Global Poker brand

Now, Wallach argues, social sweeps casinos should deal with similar scrutiny.

'These differences are not approximate,' Wallach stated of social sweeps gambling establishments. 'They have consistently been mentioned by courts and state attorney generals as crucial factors in determining that a sweepstakes promotion was in reality a guise for prohibited sports betting.'

One of the casino industry's leading trade companies, the American Gaming Association, is now pressing lawmakers to examine sweepstakes operators and, in many cases, enact new legislation on the problem.

'Consumers are being denied of securities and states are passing up significant tax and earnings opportunities as this sports betting replaces that conducted through controlled channels,' checked out a well-circulated AGA memo.

And after that there are the complainants who have actually taken legal action against social gambling establishments in more than a dozen states.

Sweepstakes casino operators paid a combined $14.2 million in 4 separate cases in Kentucky without admitting any misbehavior, according to the Washington Post. Meanwhile VGW accepted pay $11.75 million in one class-action lawsuit, saying the settlement was made to prevent legal costs and continued lawsuits.

Michael Phelps has signed a handle the VGW Group, which owns Global Poker

In the latest suit, which is largely comparable to its predecessors, New york city state residents Lamar Prater and Rebecca Pratt both declare to have actually lost well over $1,000 to VGW, which is described in the filing as an 'unlawful gambling business. '

Apple and Google have also been named as accuseds in suits for hosting the sweepstakes sites. But unlike VGW, neither tech company reacted to DailyMail.com's ask for comment.

'We normally don't talk about matters before the courts,' a VGW representative told DailyMail.com through email. 'However, we note that this claim has only simply been submitted with the court and VGW has actually not been formally served.

'We have complete self-confidence in our compliance with all laws and guidelines where we operate, and stay confident about the future,' the representative continued. 'We continue to offer our free-to-play video games throughout most of The United States and Canada, as we have for more than a decade, developing not just excellent games, user experiences and entertainment, but also ensuring this is done safely, properly and at the highest level of requirements.

'More broadly, we 'd restate that class actions and other litigations and arbitrations are fairly typical throughout the online social video games industry (and the US more broadly), and our basic practice is that we intend to vigorously defend any claim which may be brought versus us.'

The issues in between standard online gaming and sweepstakes gambling establishments could show bothersome for some celebrity endorsers.

Towns, a star center with the Knicks, and the 76ers' George both back VGW's Global Poker brand name while the NBA is partnered with conventional gaming titans like FanDuel and DraftKings.

'It's ironic that expert athletes are hawking unlawful sports betting wagering 'sweeps' websites while at the very same time the leagues want to predict a strong position against prohibited sports betting - especially when attempting to tamp down the occasional sports betting scandal,' Glaser informed DailyMail.com.

It was simply eight months ago that Toronto Raptors forward Jontay Porter got a life time restriction from the NBA over accusations he conspired with gamblers. However, to be clear, Porter's scandal is unrelated to anything involving social or sweepstakes casinos.

In addition to VGW, Apple and Google are being taken legal action against for hosting apparently illegal sports betting websites

Regardless, Glaser sees sweepstakes gambling establishments as a major concern for leagues such as the NBA.

'I 'd expect that a league crackdown on athletes backing sweepstakes websites refers when, not if,' Glaser added.

Neither an NBA representative nor the players' agents reacted to DailyMail.com's ask for comment. For that matter, spokespeople for Drake, DJ Khaled, Hilton, Seacrest and Phelps also neglected to react to DailyMail.com e-mails.

Asked if their celebrity endorsers have an obligation to discuss to customers the differences and resemblances between iGaming and sweepstakes gambling establishments, VGW firmly insisted there is nothing more that requires to be done.

'We have full confidence in our influencer and ambassadorial collaborations, and our organization practices more broadly,' the spokesperson stated. 'A few of our values are" our players come initially" and" we do what's right", and we put our worths at the core of whatever we do.'

Glaser, an outspoken challenger of sweepstakes sites, sees things in a different way.

'Celebrities who lend their names to dubious unlawful gambling websites are, at a minimum, putting their credibilities at danger in addition to courting civil and class actions by consumers who declare harm,' Glaser said. 'There is likewise some danger that state regulators and state attorney generals of the United States rope celeb endorsers into enforcement efforts for helping with unlawful gambling.'

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